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Social Insurance

People are confronted with a variety of risks in the course of their lives and the lives of their dependents. How can markets be organized to protect people against risks such as illness, displacement and disability while at the same time provide them with incentives and opportunities to be educated, secure jobs and remain in good physical and emotional health? How can government programs be structured to effectively find the delicate balance between insurance and incentives?

University of Minnesota faculty and alumni have been at the forefront of economic research that falls within this broad umbrella of topics including healthcare, Social Security, disability insurance, bankruptcy law, education and income inequality. The Institute aims to further the economic analysis of these topics by funding research and communicating its policy implications to the greater public.

Despite the prolonged equity market rally, recent headlines suggest that pension funding continues to be a challenge for U.S. public funds. A long period of below-trend real economic growth could lead to further deterioration in pension funding ratios.

It’s not every day that we have a Nobel Prize winner on campus to advise undergraduates, present a public lecture, receive an honorary degree, and cheer on the home team. Learn about Professor Daniel McFadden’s recent trip to the University of Minnesota.

After the Great Recession left millions of Americans out of work, many received extended unemployment insurance benefits. While some accused the extra aid of slowing economic recovery, the latest research finds no evidence that increasing the duration of unemployment benefits leads to large negative effects on the economy.

In the past three decades, explanations for income inequality have multiplied almost as fast as the compensation gap in the U.S. and industrialized world. The way private firms have sorted and segregated workers by skill and pay drives disparity in ways that require a closer look from policymakers.

New research examining six decades of income data by Fatih Guvenen and his co-authors produces interesting findings. “We are maybe looking at the wrong place for the solution to stagnation in wages and rising inequalities,” Guvenen said. “To understand higher inequality, we should turn and take a closer look at youth.”

As the nation prepares to undergo a transition in leadership, the future of health insurance is unclear. The healthcare system altered by President Obama yielded many supporters and critics alike, but politics aside, what effects did the Affordable Care Act and Medicare have on the marketplace and economy?

University of Minnesota PhD alumnus Art Rolnick was selected to present the 2016 Minnesota Lecture. He shared the lessons he learned from Walter Heller and how they have helped him use economic evidence to shape political will.

The security of retirement income is best served by reliance on market pricing mechanisms, funding policies that approximate what individuals would otherwise do, clear metrics to measure progress towards secure retirement, long-term commitment to policies, and transparency about when and how rules could change.

The foundation of better pension systems should be, in part, based on lifecycle portfolio choice models. These models provide clear guidance for policymakers on how to promote higher savings rates, foster appropriate investment risk-taking during working years, and encourage an alignment of institutional and individual discount rates.

Policymakers should be concerned about the ability of many of the world's pension systems to deliver on their promises. It is time to build a new foundation for pension systems using the tools of quantitative economic analysis with aggregate welfare as the evaluation yardstick.